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Update: HSBC bill for money laundering may top $1.5bn

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05/11/2012
Britain's largest bank HSBC has set aside an extra $800m to cover settlements for breaching anti money-laundering rules in the US.

The bank, which had already set aside $700m to cover the scandal, outlined the extension in its third-quarter results.

Stuart Gulliver, HSBC’s chief executive, warned shareholders the financial penalties could be significantly higher as the firm has yet to agree a settlement with the US authorities.

“The third quarter results include an additional provision of $800m in relation to the ongoing US anti-money laundering, Bank Secrecy Act and Office of Foreign Assets Control investigations,” he said. 

“We are actively engaged in discussions with US authorities to try to reach a resolution, but there is not yet an agreement.

“Indeed, the final amount of the financial penalties could be higher, possibly significantly higher, than the amount accrued.”

The settlement relates to inadvertent breaches by HSBC of anti-money laundering procedures in its Mexican operations.

It is one of the largest punishments ever meted out to a British bank.

HSBC is understood to have held talks with US authorities over the past few months to settle the claims, which came to light following a year-long investigation by a US senate committee.

The Senate Committee on Homeland Security branded HSBC as having been “pervasively polluted for a long time” by allowing funds to be moved to and from its US branches to countries including Mexico, Syria, the Cayman Islands, Iran and Saudi Arabia.

HSBC reported a profit before tax of $3.5bn in the third quarter, down from $3.7bn in Q3 2011. It also suffered another $353m charge for UK mis-selling, mainly for payment protection insurance.

The group’s share price was down 2.12% or 13p to 612p at 9.45am, while the FTSE 100 also in the red, falling 0.55% or 32 points to 5,835.

 

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